Telecom Giants AT&T and Verizon Face Investor Skepticism Over Lead-Cable Issue and Debt Load: Report

AT&T Inc T and Verizon Communications Inc VZ struggled with toxic lead in their telephone lines and heavy debt loads as they reported their quarterly earnings.

The issue of toxic lead in their networks emerged after a report triggered uncertainty among investors about potential environmental obligations and legal liabilities.

AT&T said lead-clad lines are less than 10% of its network's 2 million miles of sheathed copper cable. Verizon said such cables represent a small percentage of its copper network's roughly 540,000 miles of lines. 

AT&T and Verizon were among the worst-performing stocks in the S&P 500 index in the first half of 2023, the Wall Street Journal reports.

Verizon's debt load increased significantly after spending a record sum on wireless spectrum licenses to enhance its 5G connections, while AT&T's debt ballooned due to the DirecTV and Time Warner acquisitions.

Both companies shared plans to reduce their debt over the coming years, while high financial leverage posed a significant headwind.

Rival cellphone carrier T-Mobile US, Inc TMUS has avoided the recent selloff as it does not own old landline infrastructure and does not pay dividends, instead focusing on shareholder-friendly stock buybacks.

Telecom companies will likely catch a break as they wind down their heaviest spending on 5G upgrades.

Verizon's customer base has been eroding, prompting the company to reevaluate its wireless plan charges, while AT&T's stock suffered after reporting lower free cash flow than expected.

Telecom companies received pandemic-era subsidies to keep Americans connected, but the boost has faded as U.S. officials phased out the programs and replaced them with the Affordable Connectivity Program.

The new federal voucher program offers up to $30 off a qualifying customer's monthly phone bill. Still, analysts suggest it has not driven up subscriber numbers as quickly as the emergency subsidies did.

Price Actions: T shares traded higher by 0.21% at $14.79 premarket on the last check Monday. VZ shares traded higher by 0.35% at $34.00.

Photo by Tdorante10 via Wikimedia

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.